Other Stuff

While this story is about my experience in packaging for computer retail channels, if you substitute the word “web site” for retail, you’ll get the idea why these lessons were timeless for me. 74HGZA3MZ6SV

SuperMac sold our graphic boards for the Macintosh through multiple distribution channels: direct sales to major accounts, national chains, independent rep firms, etc. But the computer retail channel was a large part of our sales. That meant that our boards were packaged in boxes sold to retailers and were displayed on shelves in their computer stores. Customers went into the store either looking for the SuperMac product by name (if our demand creation activities had been effective) or went in unsure of which brand of board to buy. If they were in the store but teetering on the edge of a purchasing decision, there were only two ways to influence them: incent the sales staff (give the salespeople a special bonus to sell your product) and/or have box packaging sell itself by screaming “buy me.”

Maybe It’s Me
When I got to the SuperMac, our Marketing Communications group told me about our “award-winning” retail packaging for our graphics boards. Yet when I saw our retail package, I was confused. Confused because while I knew absolutely nothing about retail packaging, as a consumer I knew this box was not something I would pay attention to. It was black with absolutely no compelling reason to buy – no awards, no why-to-buy message, nothing.

While I wasn’t an expert in retail packaging, even as a consumer I knew that when I was in a store, I scanned four or five products on a shelf, grabbed the most interesting one, read what was on the box, and picked one. And the product that “talked to me”, the loudest and most seductively, was the one that went home with me.

“Black Hole of Packaging” Strategy
Since we had no facts, other than my opinion that something wasn’t right, I took our staff on a field trip. (You can’t do marketing from inside the building.) We visited a couple of retail stores to look at how other companies were packaging their products and how ours looked next to theirs. Standing in the aisles we collectively got a sinking feeling. Our choice of black had made our retail box invisible on the shelf.

But worse, we had been relegated to the bottom shelf (death valley, since very few people look at their feet when shopping.) We were down on the bottom because no one had done any “shelf merchandizing” – that is we did not employ “rack jobbers” or the retail stores themselves to put our boxes at eye level in the right place on the shelf. (These are basic practices for companies selling through retail stores.)

We were on the bottom row – with an invisible box. We labeled this our “Black Hole of Packaging” strategy. The package had won awards all right – for the ad agency. The design was actually a negative drag on selling anything off a retail shelf.

Getting Smarter
While we all had opinions about what we should do, we realized we needed some facts from someone with retail packaging expertise. Luckily (or maybe because we were in Silicon Valley where there was a domain expert for everything) there was a very smart consultant in the retail computer space, Seymour Merrin, who preached about the importance of packaging. He had teamed up with a former product manager at P&G to deliver seminars on just this subject. We learned the basics of retail packaging: make the box eye-catching, ensure there was a “why-to-buy” message, include just enough information to close the sale, fight and pay for eye-level shelf space, etc. Her packaging class was so good that we sent every new marketer at SuperMac to take it. From grumbling skeptics, they all became packaging design converts.

We realized that we needed to take all these lessons and redesign our packaging.

You May Hate It, But You Won’t Ignore It
The results of our package redesigns were packages like “SuperMac Thunder II”. They were bright, they were loud, and they had lots of reasons to buy front and back. And for sure they were never going to win any design awards.

To check how effective our new packaging was, we ran tests at our local computer retailer. We would run in and put test versions of dummy boxes on the shelf and just watch what happened – we wanted to see if people picked up the box, and when they did what they looked at and what they read. (We would interview them after they put the box back on the shelf. And we had to convince a few of them the box was really empty.) The most interesting thing we learned was that people felt more comfortable about a product when there were words of encouragement on the package. So we started putting stickers on the packaging every time we’d win an award. People would go, “Oh, this one won the “best of MacUser Magazine benchmark” award,” and it would confirm that this was a safe purchasing choice.

Owning Marketing for our Entire Channel In thinking about the packaging story, it would have been easy to blame the agency who designed the box for poor package design. Or blame my MarCom department who approved it. But that wasn’t the root cause of the problem. It was a management problem. We had been outsourcing an important part of our demand creation strategy – packaging – to an outside agency without having the expertise to judge or manage the results. We hadn’t taken the time to learn the basics of packaging ourselves. And the final lesson was that we were keeping score on our packaging with the wrong metrics – it wasn’t about awards, it was about sales in the retail channel.

So we not only sent everyone through packaging school, we also brought the packaging design in-house. From now on we would design the retail boxes ourselves, not because we could do a better design job, but because this was a critical skill that our company and department needed to learn – using packaging to increase retail sales. When we had mastered the art, then I was ready to outsource it again, but not before this became a core competency of my department.

Oh yes, and retail sales doubled with the new product packaging.

New Century, New ChannelsFor many of you reading this, boxes sitting on a retail shelf may seem hopelessly outdated, but the same marketing lessons hold for “award winning” web sites or social media. Your design or ad agencies can impress you with their awards, but if you’re not moving product or creating demand, you’ve missed the point.

Great story – your point about snazzy design vs. actual impact is still relevant in the context of spending money on outsourced web graphic design. On the surface, it might seem difficult to quantify the value of good design – however, as per your article, I don’t see any reason why contracts with designers wouldn’t be structured in such a way that target conversion rates, bounce rates, and other metrics would drive the compensation level.

Steve, in many of your posts I’ve noticed you say certain things can not be delegated/outsourced (e.g demand creation strategy).
Interestingly, here you were ok to delegate packaging design after you had understood it.
I was wondering:
– what must not be delegated?
– what must be achieved before delegating something?
Maybe the core of what you talk about in getting companies to success lies in the answer to these 2 questions.
Oh, I absolutely love your “I was having coffee with person the other day” stories. Keep ‘em coming.
Many thanks, you’ve changed my startup a hundred times already.

Colin,
I’ve observed that when you’re a founding CEO delegating things you don’t understand is equivalent to taking the money you raised and going to Las Vegas.

Initially your job is to understand each of the parts of your business model before you hire someone to do it. Hopefully you and your co-founders are experts in one or two parts (agile development, SEO/SEM, etc.) so at least some parts are being run by people who know what they are doing. But the rest; sales, marketing, bus dev is actually customer development that the founder needs to understand. The goal is you to learn enough so you can’t be BS’d by a VP of Sales with a great rolodex and golf score. Or by a VP of Marketing who talks “branding”, SEO/SEM, PR agency, etc.

In the perfect world this happens when the founder(s) actually close the first few (3-3000 depending on market) paying customers themselves. After that you’ve become a battle-hardened realist. And when you do delegate responsibility I tend to favor the “Trust but Verify” model- telling new employees, “I’m going to be looking over your shoulder for the first 90 days. When you’ve proven you can do the job I’ll get out of hair. Until then it’s my company, my responsibility. You need to earn it.